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Pub. 919, How Do I Adjust My Tax Withholding? 2004 Tax Year

Main Contents

This is archived information that pertains only to the 2004 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Purpose of This Publication

The purpose of this publication is to help you check your withholding and, if necessary, prepare Form W-4 to adjust your withholding. When you first begin a job, you must complete a Form W-4 and give it to your employer to establish your initial withholding. You can adjust your withholding by filing a new Form W-4 with your employer at any time.

Note.

You do not have to file Form W-4 each year unless you need to adjust your withholding.

Checking Your Withholding

The purpose of this section is to explain why, when, and how to check your withholding to see if you will have enough, but not too much, tax withheld for 2005.

Why Should I Check My Withholding?

You should try to have your withholding match your actual tax liability. If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. If too much tax is withheld, you will lose the use of that money until you get your refund.

You should check your withholding if there are personal or financial changes in your life or changes in the law that might change your tax liability. See Figure 1.

When Should I Check My Withholding?

The earlier in the year you check your withholding, the easier it is to get the right amount of tax withheld.

You may want to check your withholding when any of the following situations occur.

  1. You receive a paycheck stub (statement) covering a full pay period in 2005, showing tax withheld based on 2005 tax rates.

  2. You prepare your 2004 tax return and get a:

    1. Big refund, or

    2. Balance due that is:

      1. More than you can comfortably pay, or

      2. Subject to a penalty.

  3. There are changes in your life or financial situation that affect your tax liability. See Figure 1.

  4. There are changes in the tax law that affect your tax liability. See Tax Law Changes, later.

Caution
You must give your employer a new Form W-4 to adjust your withholding within 10 days of any event that decreases the number of withholding allowances you can claim, such as your divorce if you are claiming married status.

Figure 1. Personal and Financial Factors

You may want to check your withholding after events in your life that are likely to affect your tax liability. Examples are listed below.
Factor Examples

Lifestyle change
Marriage

Divorce

Birth or adoption of child

Loss of an exemption

Purchase of a new home

Retirement

Wage income
You or your spouse start or stop working, or start or stop a second job

Increased or decreased income not subject to withholding
Interest income

Dividends

Capital gains

Self-employment income

IRA distributions (including Roth IRA conversion distributions)

Increased or decreased adjustments to income
IRA deduction

Student loan interest deduction

Alimony expense

Increased or decreased itemized deductions or tax credits
Medical expenses

Taxes

Interest expense

Gifts to charity

Job expenses

Education credit

Tax Law Changes

If there are tax law changes that increase your tax for 2005 and you do not increase your withholding, you may have to pay tax when you file your return. If there are changes that decrease your tax for 2005 and you do not decrease your withholding, you may get a larger refund. You can get this money back earlier by reducing your withholding.

Changes to note for 2005 include a uniform definition of child that will apply for purposes of dependency exemptions and for qualifying for head of household filing status, the earned income credit, the child tax credit, and the child and dependent care credit. Income thresholds and contribution limits for certain retirement savings accounts are increased. You can elect to deduct state and local sales taxes instead of state and local income taxes if you itemize deductions.

For information about changes in the law for 2004 and 2005, get Publication 553, Highlights of 2004 Tax Changes, or visit the IRS web site at www.irs.gov.

How Do I Check My Withholding?

You can use the worksheets and tables in this publication to see if you are having the right amount of tax withheld.

Follow these steps.

  1. Fill out Worksheet 1 to project your total federal income tax liability for 2005.

  2. Fill out Worksheet 2 to project your total federal withholding for 2005 and to compare your projected tax to your projected withholding.

If you are not having enough tax withheld, Worksheet 2 will show you how much more to have withheld each payday.

If you are having more tax withheld than you need to have withheld, Worksheet 2 will refer you to How Do I Decrease My Withholding?.

What If Not Enough Tax Is Being Withheld?

If not enough tax will be withheld, you should give your employer a Form W-4 showing either a reduced number of withholding allowances or an additional amount to be withheld from your pay. See How Do I Increase My Withholding?, later.

There is a good chance you are not having enough tax withheld if:

  • You have more than one job at a time,

  • Your spouse also works,

  • You have income not subject to withholding, such as capital gains, rental income, interest, and dividends, or

  • You owe other taxes such as self-employment tax or household employment taxes.

If your employer cannot withhold enough additional tax from your pay, you may need to make estimated tax payments. This might be the case if your pay is low and you have substantial nonwage income, such as interest, dividends, capital gains, or earnings from self-employment. For more information on estimated tax, get Publication 505, Tax Withholding and Estimated Tax.

What If Too Much Tax Is Being Withheld?

If too much tax is withheld, you may receive a large refund when you file your return. If you would prefer to receive the money during the year, you may be able to decrease your withholding by giving your employer a new Form W-4.

There is a good chance you are having too much tax withheld if:

  • You got a big refund for 2004 and your income, adjustments, deductions, and credits will remain about the same this year,

  • Your income will remain about the same as last year, but your adjustments, deductions, or credits will increase significantly, or

  • You got a refund last year; your income, adjustments, and deductions will remain about the same as last year; but you will qualify for one or more tax credits this year that you did not qualify for last year.

Note.

Adjustments to income are listed on Form 1040 and Form 1040A near the bottom of page 1. Itemized deductions appear on Schedule A (Form 1040). Credits appear on page 2 of Form 1040 and Form 1040A. See also Figures 1 and 2.

Adjusting Your Withholding

The purpose of this section is to explain how to adjust your withholding.

If you are not having enough tax withheld or you are having too much tax withheld, you should either increase or decrease your withholding.

How Do I Adjust My Withholding?

You increase or decrease your withholding by filling out a new Form W-4 and giving it to your employer. You can use the worksheets and information in this publication to help you complete Form W-4. You can complete the Form W-4 near the end of this publication and give it to your employer.

How Do I Increase My Withholding?

There are two ways to increase your withholding. You can:

  • Decrease the number of allowances you claim on line 5 of Form W-4, or

  • Enter an additional amount that you want withheld from each paycheck on line 6 of Form W-4.

How to request an additional amount to be withheld.   You can request that an additional amount be withheld from each paycheck by following these steps.

  1. Complete Worksheets 1 and 2.

  2. Complete a new Form W-4 if the amount on line 5 of Worksheet 2 is more than you want to have to pay or would cause a penalty when you file your tax return for 2005.

  3. Enter on line 5 of the new Form W-4 the same number of withholding allowances your employer now uses for your withholding. This is the number of allowances you entered on the last Form W-4 you gave your employer.

  4. Enter on line 6 of the new Form W-4 the amount from line 6 of Worksheet 2.

  5. Give your newly completed Form W-4 to your employer.

   If you have this additional amount withheld from your pay each payday, you should avoid owing a large amount at the end of the year.

Example.

Using Worksheets 1 and 2, Steve figures that his 2005 tax liability will be $5,000 and that his withholding for the year will be $4,700. Steve's tax will be underwithheld by $300 ($5,000 - $4,700). He will have to pay this amount when he files his 2005 tax return or he can increase his withholding. Steve gets a new Form W-4 from his employer, who tells him that there are 50 paydays remaining in the year. Steve completes the form as before, and enters the same number of withholding allowances as before, then enters $6 ($300 ÷ 50) on line 6 of the form. This is the additional amount to be withheld from his pay each payday. He gives the completed form to his employer.

What if I have more than one job or my spouse also has a job?   You are likely to need to increase your withholding if you have more than one job (or if you are married filing jointly and your spouse also works). If this is the case, you can increase your withholding for one or more of the jobs.

  You can apply the amount on line 5 of Worksheet 2 to only one job or divide it between the jobs any way you wish. For each job, determine the extra amount that you want to apply to that job and divide that amount by the number of paydays remaining in 2005 for that job. This will give you the additional amount to enter on line 6 of the Form W-4 you will file for that job. You need to file a Form W-4 for each job for which you are changing your withholding.

Example.

Meg Green works in a store. Her husband, John, works full time in manufacturing. They file a joint income tax return. When they fill out Worksheets 1 and 2, they find they will not have enough tax withheld. They can divide the amount on line 6 of Worksheet 2 any way they want. They can enter an additional amount on either of their Forms W-4, or divide it between them. They decide to have all of the additional amount from line 6 withheld from John's wages, so they enter on line 6 of his W-4 the number from line 6 of their completed Worksheet 2. Both claim the same number of allowances as before.

How Do I Decrease My Withholding?

If you expect to have more tax withheld than your projected tax liability for 2005, you may be able to decrease your withholding by increasing the number of allowances that you claim on Form W-4.

Caution
You can only claim the number of allowances to which you are entitled. To see if you can decrease your withholding by increasing your allowances, see the Form W-4 instructions and the rest of this publication.

How do I increase the number of allowances I can claim?    You figure and increase the number of withholding allowances you are entitled to claim as follows.

  1. Complete Worksheets 1 and 2.

  2. If your projected withholding is significantly more than your projected tax, get a new Form W-4 (or use the one in the back of this publication).

  3. Complete the Personal Allowances Worksheet on Form W-4.

  4. Use the remainder of the worksheets in this publication, as applicable.

  5. Complete the Deductions and Adjustments Worksheet on Form W-4 if you plan to itemize deductions, claim adjustments to income, or claim tax credits from Worksheet 7 on your 2005 return.

  6. Complete the Two-earner/two-job worksheet on Form W-4 if you meet the criteria on line H of the Form W-4 Personal Allowances Worksheet.

  7. Fill out Form W-4.

  8. Enter the number of allowances you are entitled to claim on line 5 of Form W-4.

  9. If the number of allowances you are entitled to claim is different from the number you are already claiming, give the newly completed Form W-4 to your employer.

What if I can claim tax credits?   Figure 2 shows tax credits you may be able to use to reduce your withholding. The Form W-4 Personal Allowances Worksheet only provides rough adjustments for the child and dependent care credit (line F) and the child tax credit (line G). Use Worksheet 7 to take these credits into account more accurately and also take other credits into account.

  
Caution
 If you take the child and dependent care credit into account on Worksheet 7, enter -0- on line F of the Personal Allowances Worksheet. If you take the child tax credit into account on Worksheet 7, enter -0- on line G of the Personal Allowances Worksheet.

  To figure the additional amount to add on line 5 of the Form W-4 Deductions and Adjustments Worksheet for your tax credits, complete Worksheet 7. Then complete the Form W-4 Deductions and Adjustments Worksheet and the rest of Form W-4.

Example.

Brett and Alyssa are married and expect to file a joint return for 2005. Their combined estimated wages are $68,000. Their projected tax credits include a child and dependent care credit of $960 and a mortgage interest credit of $1,700.

They use Worksheet 7 to see whether they can convert their tax credits into additional allowances.

  1. They enter their expected child and dependent care credit, $960, on line 1 of Worksheet 7.

  2. They enter their expected mortgage interest credit, $1,700, on line 8 of Worksheet 7.

  3. They add these credits and enter the total, $2,660, on line 10.

  4. Because they are married filing a joint return, they use the table for married filing jointly or qualifying widow(er).

  5. They see that their combined estimated wages, $68,000, falls between $34,001 and $79,000, and that the number to the right of this range is 6.7.

  6. They enter 6.7 on line 11.

  7. They multiply line 10 by line 11 and enter the result, $17,822, on line 12.

  8. They take the result on line 12, and add it to their other adjustments on line 5 of the Deductions and Adjustments Worksheet on Form W-4.

  9. They finish filling out the Deductions and Adjustments Worksheet.

  10. Because they chose to account for their child and dependent care credit this way, they enter -0- on line F of the Personal Allowances Worksheet.

When Will My New Form W-4 Go Into Effect?

If the change is for the current year, your employer must put your new Form W-4 into effect no later than the start of the first payroll period ending on or after the 30th day after the day on which you give your employer your revised Form W-4.

If the change is for next year, your new Form W-4 will not take effect until next year.

Figure 2. Tax Credits

Credit For more information, see ...
Credit for child and dependent care expenses Publication 503, Child and Dependent Care Expenses
Credit for the elderly or the disabled Publication 524, Credit for the Elderly or the Disabled
Child tax credit (including additional child tax credit) Instructions for Form 1040 or Form 1040A
Education credits Publication 970, Tax Benefits for Education
Adoption credit Publication 968, Tax Benefits for Adoption
Foreign tax credit, except any credit that applies to wages not subject to U.S. income tax withholding because they are subject to income tax withholding by a foreign country Publication 514, Foreign Tax Credit for Individuals
Retirement savings contributions credit Publication 590, Individual Retirement Arrangements (IRAs)
Mortgage interest credit Publication 530, Tax Information for First-Time Homeowners
General business credit Form 3800, General Business Credit
Qualified electric vehicle credit Form 8834 Instructions
Credit for prior year minimum tax if you paid alternative minimum tax in an earlier year Form 8801 Instructions
Earned income credit, unless you requested advance payment of the credit Publication 596, Earned Income Credit
Health coverage tax credit Publication 502, Medical and Dental Expenses
District of Columbia first-time homebuyer credit Form 8859 Instructions

Figure 3. Worksheets and Tables This publication contains worksheets and tables for you to figure and adjust your tax withholding. The list below describes how each of them is used.

Use ... To ...
Worksheet 1.
Projected Tax for 2005 		Project the taxable income you will have for 2005 and the amount of tax you will have to pay on that income.
Worksheet 2.
Projected Withholding for 2005 		Project the amount of federal income tax that you will have withheld in 2005, compare your projected withholding with your projected tax, and determine whether the amount withheld each payday should be adjusted.
Worksheets 1a, 1b, 1c, and 1d.
Tax Rate Schedule Worksheets for 2005 		Project the amount of tax you will be liable for on your projected income for your filing status.
Worksheet 3.
Itemized Deductions Limit 		Figure the amount of your projected itemized deductions on Schedule A (Form 1040) if they are limited because your projected adjusted gross income is more than $145,950 ($72,975 if married filing separately).
Worksheet 4.
Exemptions Phaseout 		Figure the value of your projected exemptions if your exemptions are limited because your projected adjusted gross income for your projected filing status is more than: $145,950 if single; $218,950 if married filing jointly or qualifying widow(er); $109,475 if married filing separately; or $182,450 if head of household.
Worksheet 5.
Figuring Tax If You Expect To Have Capital Gain or Qualified Dividends 		Figure projected tax on all taxable income if you expect to have a capital gain or qualified dividends in 2005.
Worksheet 6.
Self-Employment Tax 		Figure your projected self-employment tax for 2005 if you and/or your spouse are self-employed in 2005 and your own wages and self-employment income for 2005 will be more than $90,000, or your spouse's wages and self-employment income will be more than $90,000.
Worksheet 7.
Converting Credits to Withholding Allowances 		Figure how much of an adjustment to make to line 5 of the Deductions and Adjustments Worksheet on Form W-4 to account for your projected tax credits which are not otherwise taken into consideration.
Tables 1, 2, and 3.
Standard Deduction Tables for 2005 		Determine your projected standard deduction for 2005. Do not use this table if you plan to itemize your deductions.

Worksheet 1. Projected Tax for 2005

Use this worksheet to figure the amount of your projected tax for 2005.
(Note: Enter combined amounts if married filing joint return.)
1. Enter amount of adjusted gross income (AGI) you expect in 2005. (To determine this, you may want to start with the AGI on your last year's return, and add or subtract your expected changes.) 1  
2. If you:    
  • Do not plan to itemize deductions on Schedule A (Form 1040), enter the standard deduction you expect from Table 1, 2, or 3, later    
  • Plan to itemize deductions, and the amount on line 1 is:    
    • Not more than $145,950 ($72,975 if married filing separately), enter the total itemized deductions you expect after applying any limits (such as the 7.5% limit on medical expenses).    
    • More than $145,950 ($72,975 if married filing separately), use Worksheet 3 to figure the amount to enter here 2  
3. Subtract line 2 from line 1. (If zero or less, enter -0-) 3  
4. If the amount on line 1 is:    
  • Not more than the amount shown below for your 2005 filing status, multiply the number of exemptions you plan to claim on your 2005 tax return by $3,200 and enter the result here.    
  • More than the amount shown below for your 2005 filing status, use Worksheet 4 to figure the amount to enter here 4  
    • Single, $145,950    
    • Married filing jointly or Qualifying widow(er), $218,950    
    • Head of household, $182,450    
    • Married filing separately, $109,475    
5. Subtract line 4 from line 3. (If zero or less, enter -0-.) 5  
6. If the amount on line 1:    
    • Does not include capital gain or qualified dividends, use Worksheet 1a, 1b, 1c, or 1d, as appropriate, to figure the tax to enter here.    
    • Includes capital gain or qualified dividends, use Worksheet 5 to figure the tax to enter here 6  
7. Enter any expected additional taxes from an election to report your child's interest and dividends (Form 8814), and from lump-sum distributions (Form 4972) 7  
8. Add lines 6 and 7 8  
9. Enter the amount of any expected tax credits. See Figure 2, earlier 9  
10. Subtract line 9 from line 8. (If zero or less, enter -0-.) 10  
11. Self-employment tax. If you expect to file a joint return, figure the self-employment tax for each of you separately, and enter the total on line 11. If the projected total of your net self-employment income multiplied by .9235 plus your wage income is:    
    • $400 or more, but no more than $90,000, multiply your expected net self-employment income by .9235, and multiply that result by .153 and enter here.    
    • More than $90,000, use Worksheet 6 to figure the amount to enter here. 11  
12. Enter any other expected taxes (such as tax on early distributions from an IRA, alternative minimum tax, etc.) 12  
13. Add lines 10 through 12. This is your projected tax for 2005. Enter it here and on line 1 of Worksheet 2 13  

Worksheet 2. Projected Withholding for 2005

Use this worksheet to figure the amount of your projected withholding for 2005, compare it to your projected tax for 2005, and figure an additional amount to have withheld each payday, if necessary.
(Note: Enter combined amounts if married filing joint return.)
1. Enter your projected tax for 2005 from line 13 of Worksheet 1 1  
2. Enter your total federal income tax withheld to date in 2005 from all of your jobs. (You should be able to find your withholding to date on your last payslip or statement.) 2  
3. Enter the federal tax withholding you expect for the rest of 2005. For each job, multiply the amount of federal income tax now being withheld each payday by the number of paydays remaining in the year and enter the combined amount for all jobs 3  
4. Add lines 2 and 3. This is your projected withholding for 2005 4  
5. Compare the amounts on lines 1 and 4. If:    
    • Line 1 is more than line 4, subtract line 4 from line 1, enter the result here, and go to line 6.    
    • Line 4 is more than line 1, stop here and see How Do I Decrease My Withholding? 5  
6. Divide line 5 by the number of paydays remaining in 2005 and enter the result. This is the additional amount you should have withheld from your pay each payday. Enter this amount on line 6 of Form W-4 6  

Worksheets 1a, 1b, 1c, and 1d. Tax Rate Schedule Worksheets for 2005 Worksheet 1a. For Single Filing Status

If you expect your filing status for 2005 to be single, use this worksheet to figure the amount to enter:
• On line 6 of Worksheet 1 if there is no capital gain or qualified dividends included in the total on line 1 of Worksheet 1, or
• On lines 28 and 30 of Worksheet 5 if there is capital gain or qualified dividends included on line 1 of Worksheet 1.
1. Enter the amount from line 5 of Worksheet 1, or if figuring the amount to enter on lines 28 and 30 of Worksheet 5, enter the amount from line 1 or 14 of Worksheet 5 1  
2. Enter whichever of the amounts in column A below is closer to, but not more than, the amount you entered on line 1 above 2  
  Column A Column B Column C      
  $0 10% $0.00      
  $7,300 15% $730.00      
  $29,700 25% $4,090.00      
  $71,950 28% $14,652.50      
  $150,150 33% $36,548.50      
  $326,450 35% $94,727.50      
             
3. Subtract line 2 from line 1 3  
4. Enter the percentage from column B above that corresponds to the amount from column A that you entered on line 2 4  
5. Multiply line 3 by line 4 5  
6. Enter the amount from column C above that corresponds to the amount from column A that you entered on line 2 6  
7. Add lines 5 and 6 and enter the result here and on line 6 of Worksheet 1, or on line 28 or 30 of Worksheet 5, whichever is appropriate 7  

Worksheet 1b. For Head of Household Filing Status

If you expect your filing status for 2005 to be head of household, use this worksheet to figure the amount to enter:
• On line 6 of Worksheet 1 if there is no capital gain or qualified dividends included in the total on line 1 of Worksheet 1, or
• On lines 28 and 30 of Worksheet 5 if there is capital gain or qualified dividends included on line 1 of Worksheet 1.
1. Enter the amount from line 5 of Worksheet 1, or if figuring the amount to enter on lines 28 and 30 of Worksheet 5, enter the amount from line 1 or 14 of Worksheet 5 1  
2. Enter whichever of the amounts in column A below is closer to, but not more than, the amount you entered on line 1 above 2  
  Column A Column B Column C      
  $0 10% $0.00      
  $10,450 15% $1,045.00      
  $39,800 25% $5,447.50      
  $102,800 28% $21,197.50      
  $166,450 33% $39,019.50      
  $326,450 35% $91,819.50      
             
3. Subtract line 2 from line 1 3  
4. Enter the percentage from column B above that corresponds to the amount from column A that you entered on line 2 4  
5. Multiply line 3 by line 4 5  
6. Enter the amount from column C above that corresponds to the amount from column A that you entered on line 2 6  
7. Add lines 5 and 6 and enter the result here and on line 6 of Worksheet 1, or on line 28 or 30 of Worksheet 5, whichever is appropriate 7  

Worksheet 1c. For Married Filing Jointly or Qualifying Widow(er) Filing Status

If you expect your filing status for 2005 to be married filing jointly or qualifying widow(er), use this worksheet to figure the amount to enter:
• On line 6 of Worksheet 1 if there is no capital gain or qualified dividends included in the total on line 1 of Worksheet 1, or
• On lines 28 and 30 of Worksheet 5 if there is capital gain or qualified dividends included on line 1 of Worksheet 1.
1. Enter the amount from line 5 of Worksheet 1, or if figuring the amount to enter on lines 28 and 30 of Worksheet 5, enter the amount from line 1 or 14 of Worksheet 5 1  
2. Enter whichever of the amounts in column A below is closer to, but not more than, the amount you entered on line 1 above 2  
  Column A Column B Column C      
  $0 10% $0.00      
  $14,600 15% $1,460.00      
  $59,400 25% $8,180.00      
  $119,950 28% $23,317.50      
  $182,800 33% $40,915.50      
  $326,450 35% $88,320.00      
             
3. Subtract line 2 from line 1 3  
4. Enter the percentage from column B above that corresponds to the amount from column A that you entered on line 2 4  
5. Multiply line 3 by line 4 5  
6. Enter the amount from column C above that corresponds to the amount from column A that you entered on line 2 6  
7. Add lines 5 and 6 and enter the result here and on line 6 of Worksheet 1, or on line 28 or 30 of Worksheet 5, whichever is appropriate 7  

Worksheet 1d. For Married Filing Separately Filing Status

If you expect your filing status for 2005 to be married filing separately, use this worksheet to figure the amount to enter:
• On line 6 of Worksheet 1 if there is no capital gain or qualified dividends included in the total on line 1 of Worksheet 1, or
• On lines 28 and 30 of Worksheet 5 if there is capital gain or qualified dividends included on line 1 of Worksheet 1.
1. Enter the amount from line 5 of Worksheet 1, or if figuring the amount to enter on lines 28 and 30 of Worksheet 5, enter the amount from line 1 or 14 of Worksheet 5 1  
2. Enter whichever of the amounts in column A below is closer to, but not more than, the amount you entered on line 1 above 2  
  Column A Column B Column C      
  $0 10% $0.00      
  $7,300 15% $730.00      
  $29,700 25% $4,090.00      
  $59,975 28% $11,658.75      
  $91,400 33% $20,457.75      
  $163,225 35% $44,160.00      
             
3. Subtract line 2 from line 1 3  
4. Enter the percentage from column B above that corresponds to the amount from column A that you entered on line 2 4  
5. Multiply line 3 by line 4 5  
6. Enter the amount from column C above that corresponds to the amount from column A that you entered on line 2 6  
7. Add lines 5 and 6 and enter the result here and on line 6 of Worksheet 1, or on line 28 or 30 of Worksheet 5, whichever is appropriate 7  

Worksheet 3. Itemized Deductions Limit

Use this worksheet to figure the amount to enter on line 2 of Worksheet 1 and on line 1 of the Form W-4 Deductions and Adjustments Worksheet.
1. Enter the total itemized deductions you expect for 2005 after applying any limits (such as the 7.5% limit on medical expenses) 1  
2. Enter the amount included in line 1 for medical and dental expenses, investment interest, casualty and theft losses, and gambling losses 2  
3. Subtract line 2 from line 1 3  
Note: If the amount on line 3 is zero, stop here and enter on line 2 of Worksheet 1 the larger of the amount from line 1 of this worksheet or your standard deduction from Table 1, 2, or 3.    
     
4. Multiply the amount on line 3 by .80 4  
5. Enter the amount from line 1 of Worksheet 1 5  
6. Enter $145,950 ($72,975 if married filing separately) 6  
7. Subtract line 6 from line 5 7  
Note:If the amount on line 7 is zero or less, stop here and enter on line 2 of Worksheet 1 the larger of the amount from line 1 of this worksheet or your standard deduction from Table 1, 2, or 3.    
     
8. Multiply the amount on line 7 by .03 8  
9. Enter the smaller of line 4 or line 8 9  
10. Subtract line 9 from line 1. Enter the result here, on line 2 of Worksheet 1, and on line 1 of the Form W-4 Deductions and Adjustments Worksheet 10  

Worksheet 4. Exemptions Phaseout

Use this worksheet to figure the amount to enter on line 4 of Worksheet 1.
1. Multiply $3,200 by the number of exemptions you plan to claim 1  
2. Enter the amount from line 1 of Worksheet 1 2  
3. Enter: 3  
  $145,950 if single
  $218,950 if married filing jointly or qualifying widow(er)
  $109,475 if married filing separately
  $182,450 if head of household
4. Subtract line 3 from line 2 and enter here 4  
Note:If line 4 is more than $122,500 (more than $61,250 if married filing separately), stop; you cannot take a deduction for exemptions. Enter -0- on line 4 of Worksheet 1.    
     
5. Divide the amount on line 4 by $2,500 ($1,250 if married filing separately). If the result is not a whole number, increase it to the next whole number 5  
6. Multiply the number on line 5 by .02. Enter the result as a decimal, but not more than 1 6  
7. Multiply the amount on line 1 by the decimal on line 6 7  
8. Subtract line 7 from line 1. Enter the result here and on line 4 of Worksheet 1 8  

Worksheet 5. Figuring Tax If You Expect To Have Capital Gain or Qualified Dividends

Use this worksheet to figure the amount to enter on line 6 of Worksheet 1 only if the amount on line 1 of that worksheet includes capital gain or qualified dividends.
1. Enter the amount from Worksheet 1 1.      
2. Enter your expected qualified dividends for 2005 2.      
3. Enter the net capital gain expected for 2005 3.      
4. Add lines 2 and 3 4.      
5. Enter your 28% rate gain or loss expected for 2005 5.      
6. Enter the unrecaptured section 1250 gain expected for 2005 6.      
7. Add lines 5 and 6 7.      
8. Enter the smaller of line 3 or line 7 8.      
9. Subtract line 8 from line 4 9.      
10. Subtract line 9 from 1. If zero or less, enter -0- 10.      
11. Enter the smaller of line 1 or $59,400 ($29,700 if single or married filing separately; $39,800 if head of household). 11.      
12. Enter the smaller of line 10 or line 11 12.      
13. Subtract line 4 from line 1. If zero or less, enter -0- 13.      
14. Enter the larger of line 12 or line 13. If line 11 and line 12 are the same, skip lines 15 and 16 and go on to line 17 14.      
15. Subtract line 12 from line 11 15.      
16. Multiply line 15 by 5% (.05). If lines 1 and 11 are the same, skip lines 17–27 and go to line 28     16.  
17. Enter the smaller of line 1 or line 9 17.      
18. Subtract the amount from line 15 from line 17. If zero or less, enter -0- 18.      
19. Multiply line 18 by 15% (.15). If line 6 is zero or blank, skip lines 20 – 24 and go to line 25     19.  
20. Enter the smaller of line 3 or line 6 20.      
21. Add lines 4 and 14 21.      
22. Subtract line 1 from line 21. If zero or less, enter -0- 22.      
23. Subtract line 22 from line 20. If zero or less, enter -0- 23.      
24. Multiply line 23 by 25% (.25). If line 5 is zero or blank, skip lines 25 – 27 and go to line 28     24.  
25. Add lines 14, 15, 18, and 23 25.      
26. Subtract line 25 from line 1 26.      
27. Multiply line 26 by 28% (.28) 27.  
28. Tax on the amount on line 14 from the 2005 Tax Rate Schedule 28.  
29. Add lines 16, 19, 24, 27, and 28 29.  
30. Tax on the amount on line 1 from the 2005 Tax Rate Schedule 30.  
31. Tax. Enter the smaller of line 29 or line 30 here and on line 6 of Worksheet 1 31.  

Worksheet 6. Self-Employment Tax

Use this worksheet to figure the amount to enter on line 11 of Worksheet 1. If you are married filing a joint return and you are both self-employed, complete this worksheet separately for each spouse, and combine the amounts on line 11 of Worksheet 1.
1. Enter expected self-employment income for 2005 1  
2. Multiply the amount on line 1 by .9235 2  
3. Multiply the amount on line 2 by .029 3  
4. Social security tax maximum income 4 $90,000
5. Enter estimated wages for 2005 5  
6. Subtract line 5 from line 4 6  
Note:If line 6 is zero or less, stop here and enter the amount from line 3 on line 11 of Worksheet 1.  
     
7. Enter the smaller of line 2 or line 6 7  
8. Multiply the amount on line 7 by .124 8  
9. Add line 3 and line 8. Enter the result here and on line 11 of Worksheet 1. If you expect to file a joint return, combine the result with your spouse's expected self-employment tax and enter the total on line 11 of Worksheet 1. 9  

Converting Credits To Withholding Allowances

Standard Deduction Tables for 2005

There are three standard deduction tables. Use the appropriate one to arrive at your standard deduction for 2005.

Table 1. For Most People

DO NOT use this chart if you were 65 or older or blind, OR if someone can claim you (or your spouse if married filing jointly) as a dependent during 2005.
If Your Filing Status is: Your Standard Deduction is:
Single, or Married filing separately $5,000
Married filing joint return or Qualifying widow(er) with dependent child 10,000
Head of household 7,300

Table 2. For People Age 65 or Older or Blind
If someone can claim you (or your spouse if married filing jointly) as a dependent for 2005, use the worksheet in Table 3 instead.
Check the correct number of boxes below. Then go to
the chart.
You 65 or older
check box
 Blind
check box
Your spouse, if claiming spouse's exemption 65 or older
check box
 Blind
check box
Total number of boxes you checked
check box

If Your
Filing Status is: 		And the Number
in the Box
Above is: 		Your Standard Deduction is:
Single 1 $6,250
  2 7,500
Married filing jointly 1 11,000
or Qualifying 2 12,000
widow(er) with 3 13,000
dependent child 4 14,000
Married filing 1 6,000
separately 2 7,000
  3 8,000
  4 9,000
     

Head of household 1 8,550
  2 9,800

caution
If you are married filling a separate return and your spouse itemizes deductions, or if you are a dual-status alien, you cannot take the standard deduction even if you were 65 or older or blind.

Table 3. For Dependents
Use Table 3 ONLY if someone can claim you (or your spouse if marred filing jointly) as a dependent for 2005.
If you were 65 or older or blind, check the correct number of boxes below. Then go to the worksheet.
You 65 or older
check box
 Blind
check box
Your spouse, if claiming spouse's exemption 65 or older
check box
 Blind
check box
Total number of boxes you checked
check box

1.   Enter your expected earned income (defined below) plus $250. 1.  
2.   Minimum amount 2. $800
3.   Compare the amounts on lines 1 and 2. Enter the larger of the two amounts here. 3.  
4.   Enter on line 4 the amount shown below for your filing status.    
  • Single or Married filing separate return, enter $5,000    
  • Married filing jointly or Qualifying widow(er) with dependent child, enter $10,000 4.  
  • Head of household, enter $7,300    
5. Standard deduction.    
  a. Compare the amounts on lines 3 and 4. Enter the smaller of the two amounts here. If under 65 and not blind, stop here. This is your standard deduction. Otherwise, go on to line 5b. 5a.  
b. If 65 or older or blind, multiply $1,250 ($1,000 if married or qualifying widow(er) with dependent child) by the number in the box above. Enter the result. 5b.  
  c. Add lines 5a and 5b. This is your standard deduction for 2005.
5c.  

Earned incomeincludes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you must include in your income.

Blank Form W–4 page 1Form:Form: W–4

blank Form W–4 page 2

How To Get Tax Help

You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. By selecting the method that is best for you, you will have quick and easy access to tax help.

Contacting your Taxpayer Advocate.   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate.

  The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review.

  To contact your Taxpayer Advocate:

  • Call the Taxpayer Advocate toll free at
    1-877-777-4778.

  • Call, write, or fax the Taxpayer Advocate office in your area.

  • Call 1-800-829-4059 if you are a TTY/TDD user.

  • Visit www.irs.gov/advocate.

  For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS—How To Get Help With Unresolved Tax Problems.

Free tax services.   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. It contains a list of free tax publications and an index of tax topics. It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics.

Access by computer
Internet. You can access the IRS website 24 hours a day, 7 days a week, at www.irs.gov to:

  • E-file your return. Find out about commercial tax preparation and e-file services available free to eligible taxpayers.

  • Check the status of your 2004 refund. Click on Where's My Refund. Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). Have your 2004 tax return available because you will need to know your filing status and the exact whole dollar amount of your refund.

  • Download forms, instructions, and publications.

  • Order IRS products online.

  • Research your tax questions online.

  • Search publications online by topic or keyword.

  • View Internal Revenue Bulletins (IRBs) published in the last few years.

  • Figure your withholding allowances using our Form W-4 calculator.

  • Sign up to receive local and national tax news by email.

  • Get information on starting and operating a small business.

Request information by fax
Fax. You can get over 100 of the most requested forms and instructions 24 hours a day, 7 days a week, by fax. Just call 703-368-9694 from the telephone connected to your fax machine. When you call, you will hear instructions on how to use the service. The items you request will be faxed to you.

For help with transmission problems, call 703-487-4608.

Long-distance charges may apply.

Phone number
Phone. Many services are available by phone.

  • Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current-year forms, instructions, and publications and prior-year forms and instructions. You should receive your order within 10 days.

  • Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.

  • Solving problems. You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Call your local Taxpayer Assistance Center for an appointment. To find the number, go to www.irs.gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service.

  • TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications.

  • TeleTax topics. Call 1-800-829-4477 and press 2 to listen to pre-recorded messages covering various tax topics.

  • Refund information. If you would like to check the status of your 2004 refund, call 1-800-829-4477 and press 1 for automated refund information or call 1-800-829-1954. Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). Have your 2004 tax return available because you will need to know your filing status and the exact whole dollar amount of your refund.


Evaluating the quality of our telephone services. To ensure that IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. One method is for a second IRS representative to sometimes listen in on or record telephone calls. Another is to ask some callers to complete a short survey at the end of the call.

Walk-in services
Walk-in. Many products and services are available on a walk-in basis.

  • Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.

  • Services. You can walk in to your local Taxpayer Assistance Center every business day to ask tax questions or get help with a tax problem. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. You can set up an appointment by calling your local Center and, at the prompt, leaving a message requesting Everyday Tax Solutions help. A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. To find the number, go to
    www.irs.gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service.

Address you may need
Mail. You can send your order for forms, instructions, and publications to the Distribution Center nearest to you and receive a response within 10 business days after your request is received. Use the address that applies to your part of the country.

  • Western part of U.S.:
    Western Area Distribution Center
    Rancho Cordova, CA 95743-0001

  • Central part of U.S.:
    Central Area Distribution Center
    P.O. Box 8903
    Bloomington, IL 61702-8903

  • Eastern part of U.S. and foreign addresses:
    Eastern Area Distribution Center
    P.O. Box 85074
    Richmond, VA 23261-5074

Request information on CDROM
CD-ROM for tax products. You can order Publication 1796, IRS Federal Tax Products CD-ROM, and obtain:

  • Current-year forms, instructions, and publications.

  • Prior-year forms and instructions.

  • Frequently requested tax forms that may be filled in electronically, printed out for submission, or saved for recordkeeping.

  • Internal Revenue Bulletins.

Buy the CD-ROM from National Technical Information Service (NTIS) at www.irs.gov/cdorders for $22 (no handling fee) or call 1-877-233-6767 toll free to buy the CD-ROM for $22 (plus a $5 handling fee). The first release is available in early January and the final release is available in late February.

Request information on CDROM
CD-ROM for small businesses. Publication 3207, The Small Business Resource Guide, CD-ROM 2004, is a must for every small business owner or any taxpayer about to start a business. This handy, interactive CD contains all the business tax forms, instructions, and publications needed to successfully manage a business. In addition, the CD provides other helpful information, such as how to prepare a business plan, finding financing for your business, and much more. The design of the CD makes finding information easy and quick and incorporates file formats and browsers that can be run on virtually any desktop or laptop computer.

It is available in early April. You can get a free copy by calling 1-800-829-3676 or by visiting www.irs.gov/smallbiz.

Pubs list

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